Jennifer Tozser.The Globe and Mail
Bonds and energy may not be the most popular investment bets right now – for different reasons – but they’re looking a lot more attractive to portfolio manager Jennifer Tozser.
Bonds have been pummelled this year, as many investors are painfully aware, and Ms. Tozser believes the sell-off went a little overboard, which makes them appealing.
“I’m looking at increasing my position in bonds because the prices are so depressed; there’s been so much negativity put into the bond market,” says the senior wealth adviser at National Bank Financial Wealth Management in Calgary, who oversees $420-million in assets.
Oil and gas stocks have also been unpopular amid the global transition to a low-carbon economy. However, she says Russia’s invasion of Ukraine earlier this year has underscored the need for energy security, and Canada is well-positioned to provide oil and gas to the world. Plus, the energy transition will take time.
Ms. Tozser started increasing her position in the sector last year.
Over all, she says Canada is one of the best places to invest right now, “and that’s not something I’ve been able to say for about 10 years.”
Her current portfolio is about 70 per cent equities, 10 per cent bonds and 20 per cent structured products, an alternative asset where the return is linked to an underlying asset with predefined features.
Her holdings are down 10 per cent year-to-date as of Sept. 30. That’s compared with a decrease of 25 per cent for the S&P 500 and a 13-per-cent drop in the S&P/TSX Composite Index over the same period. All performance data are based on total returns, and portfolio performance is after fees.
The Globe and Mail recently spoke with Ms. Tozser about what she’s been buying and selling, and a stock she wished she bought more of at the start of the pandemic:
Describe your investing style.
I’m looking for long-term trends, so the macroeconomic picture. Then I look at quantitative measures, the data such as profit and revenue, followed by qualitative measures such as the quality of the management team, the product and a company’s ESG program and performance. I invest in small, medium and large-cap stocks, but if I’m buying small caps, I pay attention to trading volume to ensure there’s adequate liquidity if I need to get in and out of the stock. My portfolio has a turnaround of about 25 to 30 per cent a year.
What’s your take on a recession right now?
Recession-driven stock market declines last about 9.5 months, on average. The market is usually a leading indicator of a recession. Often, by the time a recession is called, the stock market drop is largely over. I believe we’re close to the end of the current market downturn. What investors are looking for now is whether the recession will be deep or shallow. The U.S. economy is in good shape, which is a good sign. In Canada, we have two things everyone wants: energy and fertilizer. So I think these two countries are a good place to be right now for investors.
What have you been buying?
Some of the energy names I’ve owned for a while include Canadian Natural Resources Ltd. CNQ-T, Enbridge Inc. ENB-T, Pembina Pipeline Corp. PPL-T and Keyera Corp. KEY-T I then added Tourmaline Oil Corp. TOU-T around this time last year.
For bonds, I’ve been buying Pimco bond funds, namely the Pimco Tactical Income Fund PTI-UN-T and Pimco Dynamic Income Opportunities Fund PDO-N.
What have you been selling or trimming?
When interest rates went up, I got rid of two technology companies I didn’t want to sell; Adobe Inc. ADBE-Q and ServiceNow Inc. NOW-N They were good companies and trading at cheaper prices, but I believed they had a much tougher climb ahead.
I also sold some of my gold holdings in September, specifically SPDR Gold Shares (GLD). I bought GLD in the fall of 2020 as an inflation hedge. Gold is traditionally a hedge against inflation, but despite the inflation we’ve seen, GLD did not perform, so I sold it.
Name a stock you wish you had bought more of.
Canadian Natural Resources at $9.80 in March, 2020. That was the time when oil prices briefly went negative, which they shouldn’t have done. I wish I’d bought more then, knowing how it turned out. I did buy more at $24. [The stock is now trading around $82].
What investment advice do you give friends and family when they ask?
When people ask me for investment advice at a social gathering, I usually tell them to come to see me at the office. I tell them I’m just not comfortable talking about their personal finances in a group of people. If it’s one-on-one, I ask them questions about their wealth, what they already own and their risk tolerance, and offer them a few strategies. In order to be an effective adviser, you need to have a complete understanding of the client’s situation, expectations and experience. That’s why I don’t give stock tips. I only give advice.
This interview has been edited and condensed.